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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  West Fraser Timber Co. Ltd.    WFT   CA9528451052

WEST FRASER TIMBER CO. LTD.

(WFT)
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West Fraser Timber : to Acquire Norbord, Creating a Diversified Global Wood Products Leader

11/20/2020 | 08:55am EST

West Fraser Timber Co. Ltd. ('West Fraser') (TSX: WFT) and Norbord Inc. ('Norbord') (TSX and NYSE: OSB) today announced that they have entered into a strategic business combination pursuant to which West Fraser, a leading North American diversified wood products company will acquire all of the outstanding common shares of Norbord, the world's largest OSB producer, in an all-stock transaction valued at approximately C$4.0 billion (US $3.1 billion) (the 'Transaction').

Following closing, the combined company will operate as West Fraser.

With a complementary range of products, increased scale, and greater geographic and end-market diversification, West Fraser will be a global wood products leader, with established and growing positions in both North America and Europe. With low cost and profitable operations in complementary sectors, West Fraser is expected to generate more stable and resilient earnings through the cycle, with a best-in-class platform for future growth and value enhancement. At the close of this Transaction, West Fraser will be a top global producer of both lumber and OSB. 'Norbord's OSB production is a perfect complement to the West Fraser portfolio, enabling us to deliver a wider range of wood products, and making us a more complete, efficient and valuable partner for our customers,' said Raymond Ferris, President and Chief Executive Officer of West Fraser. 'Norbord is the largest global OSB producer with a well-earned reputation for cost and margin performance, and for expanding the use of OSB in new applications and industries. The Norbord business will also bring additional geographic diversity, and an expanded opportunity set, from its well-established positions in the United Kingdom and Western Europe. This Transaction gives us additional financial flexibility to pursue strategic growth opportunities, and better positions our company to deliver value to shareholders through the cycle. Our companies have complementary operating cultures, with a common priority on safety, sustainability and cost management, and we are thrilled to welcome Norbord's talented employees to West Fraser. We look forward to drawing from best practices across the operations as we pursue the significant strategic opportunities this Transaction will unlock.' 'This Transaction recognizes Norbord's global OSB position and is a very exciting opportunity for our customers, our employees and our shareholders,' said Peter Wijnbergen, President and Chief Executive Officer of Norbord. 'Joining West Fraser will allow us to expand our profile with our core new home construction customers, and provides a stronger platform to pursue our industrial OSB products strategy. Norbord shareholders will have meaningful participation in a more diversified and resilient wood products leader with a superior ability to accelerate growth, and an impressive track record of cost leadership, margin performance, and shareholder returns. For our team, this will provide expanded opportunities as part of a larger company with common values and a shared priority on safety. Our Board and executive team have great respect for West Fraser, and we look forward to being a part of a much broader business with the West Fraser team.' The companies have entered into a definitive agreement pursuant to which West Fraser will acquire all of the shares of Norbord. Norbord shareholders will receive 0.675 of a West Fraser share for each Norbord share, which equates to C$49.35 (US$37.78) per Norbord common share, based on 2 the closing price of West Fraser common shares on November 18, 2020. This represents a 13.6% premium to the closing price of Norbord's shares on the TSX on November 18, 2020, and a premium of 8.0% based on the 10 day volume weighted average trading prices of both companies. Upon closing current West Fraser shareholders will own approximately 56% of the company, with current Norbord shareholders owning approximately 44%.

Transaction Agreements

The Transaction will be completed pursuant to an arrangement agreement entered into between West Fraser and Norbord. Norbord's principal shareholder, Brookfield Asset Management Inc. and its controlled entities ('Brookfield') have entered into a voting support agreement (the 'Brookfield Support Agreement'), pursuant to which Brookfield has agreed to vote all of its Norbord common shares, representing, in total, approximately 43% of the Norbord common shares, in favour of the Transaction at a special meeting of Norbord shareholders to be held to consider the proposed Transaction (the 'Norbord Meeting'). Under the Brookfield Support Agreement, Brookfield has also agreed to vote in favour of the recommendations of West Fraser management in connection with ordinary course matters at the 2021 annual general meeting of West Fraser shareholders 4 Certain affiliates of members of the Ketcham family have entered into voting support agreements with Norbord pursuant to which they have agreed to vote a total of 13,013,800 common shares, including Class B shares, of West Fraser, representing approximately 19% of the outstanding common shares of West Fraser in favour of the Transaction at a special meeting of West Fraser shareholders to be held to approve the Transaction (the 'West Fraser Meeting'). As part of the Transaction, West Fraser has secured US$1.3 billion (C$850 million and US$650 million) in committed credit facilities, which are available upon closing and estimated to provide U$1.1 billion in undrawn revolving capacity. The committed facilities were provided by TD Securities as sole underwriter and bookrunner.

Contact:

Tel: (604) 895-2700

(C) 2020 Electronic News Publishing, source ENP Newswire

Stocks mentioned in the article
ChangeLast1st jan.
NORBORD INC. -0.08% 50.83 Delayed Quote.-7.44%
WEST FRASER TIMBER CO. LTD. -0.28% 75.91 Delayed Quote.-7.06%
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Financials
Sales 2020 5 556 M 4 345 M 4 345 M
Net income 2020 679 M 531 M 531 M
Net Debt 2020 258 M 202 M 202 M
P/E ratio 2020 7,77x
Yield 2020 0,96%
Capitalization 5 220 M 4 099 M 4 083 M
EV / Sales 2020 0,99x
EV / Sales 2021 0,81x
Nbr of Employees 8 200
Free-Float 73,3%
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Technical analysis trends WEST FRASER TIMBER CO. LTD.
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 7
Average target price 90,26 CAD
Last Close Price 76,01 CAD
Spread / Highest target 64,5%
Spread / Average Target 18,7%
Spread / Lowest Target -26,3%
EPS Revisions
Managers and Directors
NameTitle
Raymond W. Ferris President, Chief Executive Officer & Director
Henry Holman Ketcham Executive Chairman
Christopher Andrew Virostek Chief Financial Officer & Vice President
Chuck Watkins Vice President-Capital & Technology
Robert Lawrence Phillips Lead Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
WEST FRASER TIMBER CO. LTD.-7.06%4 099
LOUISIANA-PACIFIC CORPORATION2.13%4 150
UFP INDUSTRIES, INC.2.02%3 467
NORBORD INC.-7.44%3 224
DURATEX S.A.3.71%2 610
STELLA-JONES INC.-0.19%2 424